AstraZeneca could be forced to pay out hundreds of millions of dollars in damages if a ruling by a court in Massachusetts that the company had overcharged for some drugs paid for by Medicare is followed across the United States.

A judge in Boston said that the Anglo-Swedish pharmaceutical giant, along with the American drug firms Schering-Plough and Bristol-Myers Squibb, had broken state laws by engaging in “unfair and deceptive trade practices”.

Steve Berman, a lawyer with the law firm Hagens Berman Sobol Shapiro, which led the class-action suit, said that it had focused on the “practice of inflating” the average wholesale prices that the companies reported for drugs such as Zoladex, a prostate and breast cancer drug produced by AstraZeneca.

Court documents said that AstraZeneca had “acted unfairly and deceptively by causing the publication of false and inflated average wholesale prices for Zoladex which grossly exceeded actual physician acquisition costs by as much as 169 per cent”.

It said that the companies involved had allowed drugs to be sold to physicians at a substantial discount to the official average wholesale price without the knowledge of buyers such as Medicare and Medic-aid.

Mr Berman said that the lawsuit, brought on behalf of Medicare beneficiaries, insurance companies and other third-party payers, was viewed as a test case and trials were planned for the rest of the United States.

Mr Berman estimated the damages against AstraZeneca in Massachusetts would total about $32 million (£16 billion), but nationwide could reach as high as $1 billion. The case was filed in 2001 and focuses on conduct dating back to the mid1990s.

A spokesman for AstraZeneca said that the company expected the ruling to be overturned on appeal. “AstraZeneca has competed responsibly with respect to pricing and marketing of drugs and we have acted at all times in accordance with the law,” he said.

The judge dismissed claims against another company, Johnson & Johnson.

— Goldshield Group is to pay £4 million to settle claims by the Department of Health after claims of an alleged conspiracy over the sale of warfarin, a blood thinning drug, to the National Health Service. The pharmaceutical company said that Ajit Patel, the chief executive, and Kirti Patel, the chief operating officer, had resigned to focus on the case with the Serious Fraud Office. Rakesh Patel, the finance director, has been appointed chief executive.

Explore Industry Sectors

• Banking & Finance

• Construction & Property

• Consumer Goods

• Engineering

• Health

• Industrials

• Leisure

• Media

• Natural Resources

• Retailing

• Support Services

• Technology

• Telecoms

• Transport

• Utilities

Times Recommends

• BA chief waives bonus after T5 fiasco
• Prospects of cheaper loans hit as Libor soars
• Rice price dives as US and Japan set to unlock grain pact